The strange and winding fraud case against two Kingston brothers turns up ties to polygamy, Turkey, even the Mueller investigation

(Photo by Ihlas Haber Ajansı published with its permission.) In this September 2017 photo, Jacob Ortell Kingston, left, the chief executive of Washakie Renewable Energy, meets with Sezgin Baran Korkmaz, chief executive of SBK Holding, Turkish President Recep Tayyip Erdoğan and Caglar Sendil, the president of Mega Varlik Corporation. According to the Turkish news agency Ihlas Haber Ajansı, the four discussed Washakie and SBK's planned investments in Turkey. In August of 2018, Kingston was indicted by the U.S. Department of Justice on charges of fraud and money laundering. His brother Isaiah Kingston was indicted for money laundering.

That’s just one of the peculiar connections that can be claimed by the indictment against Kingston, his brother Isaiah Kingston, and a third man, Lev Aslan Dermen, commonly known as Levon Termendzhyan. The Kingstons are members of the Davis County Cooperative Society, a polygamous sect known as the Kingston Group.

Termendzhyan has been accused of leading a criminal organization in Southern California that used a corrupt Immigration and Customs Enforcement agent to sneak someone into the United States. Termendzhyan also has been accused of facilitating bribes to what court documents describe only as a “local politician” as well as a “state prosecution agency” to replace a prosecutor assigned to investigate one of his associates.

A federal grand jury in Salt Lake City alleges the Kingstons and their company, Washakie Renewable Energy, were supposed to be manufacturing biodiesel to collect a tax credit from the U.S. government worth $1 for every gallon produced, but instead they were buying and selling biofuels and falsifying the documentation to collect the tax credit. Prosecutors say the U.S. treasury paid Washakie $511 million.

Then, the grand jury also says, they laundered $11.2 million by giving what was called a loan to a person identified in the indictment as a “California businessman” referred to as “Borrower X.” That fits the description of Zubair Kazi, who is suing Washakie in a California state court. In that suit, Kazi says he received a loan from Washakie for that same amount, and Washakie and Termendzhyan tried to foreclose on him when he didn’t repay it on their timetable.

(Leah Hogsten | Tribune file photo) WRE or Washakie Renewable Energy employs 40 people. The largest biodiesel producer in Utah, Washakie Renewable Energy, held an open house in Plymouth on Thursday, September 1, 2011 to showcase its new production facility.

The indictment says documentation was made to look as though the loan came not from Washakie but from a company called SBK Holdings USA Inc. — a California firm the indictment says was owned by Termendzhyan and Jacob Kingston.

SBK originated with Korkmaz in Turkey, and it’s through that company that Mueller enters the story. From its offices in Istanbul, SBK is a holding company. Published reports and court documents describe a diverse portfolio of real estate, pharmaceuticals, financial services, energy and a failed airline called BoraJet.

He testified Washakie sold its interest in SBK for a profit later in 2014 and had no more investment in Turkey. He gave that deposition Aug. 30, 2016. Eleven days later, a Turkish government agency announced Washakie, SBK and a company owned by Termendzhyan called Noil Energy Group planned to invest $950 million in Turkey.

(Leah Hogsten | The Salt Lake Tribune) Kingston brothers Isaiah (left) and Jacob co-own WRE or Washakie Renewable Energy, that produces 10milion gallons of biofuel. The largest biodiesel producer in Utah, Washakie Renewable Energy, held an open house in Plymouth on Thursday, September 1, 2011 to showcase its new production facility.

A federal prosecutor in the fraud and money-laundering case recently suggested in open court that Jacob and Isaiah Kingston had money in Turkey all along and that they denied having investments there in the civil lawsuit because they knew law enforcement was investigating their money transfers to Turkey. One court document says Washakie wired $130 million to Turkey over the course of the scheme.

Jacob Kingston testified Washakie invested in SBK after meeting Korkmaz, the CEO of SBK in Istanbul and the businessman who would later be in the meeting with Turkey’s president. Korkmaz, in an interview posted to YouTube in May 2017, says he encouraged the Kingstons to invest. He refers to them as — translated from Turkish — his “Mormon patrons.”

Korkmaz is also the Mueller tie. In a Sept. 29 article, the investigative news website ProPublica reported that it had a copy of the subpoena Mueller sent to Korkmaz.

“The grand jury is conducting an investigation of possible violations of federal criminal laws involving the Foreign Agents Registration Act, among other offenses,” ProPublica quoted a letter accompanying the subpoena as stating. The news outlet said the letter was signed by Mueller and an assistant specializing in prosecuting terrorism cases.

It’s unclear why Korkmaz was subpoenaed. One of Mueller’s targets in his investigation was former national security adviser Michael Flynn. The ProPublica article highlighted connections between Flynn’s lobbying for Turkey and Turkish businessmen in the same orbit as Korkmaz.

FILE - In this June 21, 2017, file photo, former FBI Director Robert Mueller, the special counsel probing Russian interference in the 2016 election, departs Capitol Hill following a closed door meeting in Washington. Prosecutors working for Mueller are recommending a short prison sentence for a former Trump campaign adviser who lied to the FBI during the Russia probe. Mueller’s team says in a new court filing that George Papadopoulos should spend at least some time incarcerated and pay a nearly $10,000 fine. His recommended sentence under federal guidelines is zero to six months, but prosecutors note a similar defendant in the case spent 30 days in jail.(AP Photo/Andrew Harnik, File)

The California version of SBK is suing its former president, Edgar Sargsyan, alleging he stole $23.6 million from the company. In response, Sargsyan in a court filing said law enforcement had told him Termendzhyan is the person identified as “Co-conspirator 1” in the federal prosecution of a former ICE agent.

The ICE agent was investigated for helping a Mexican national, who could not lawfully enter the United States, get through security screenings at Los Angeles International Airport. The Mexican national and the ICE agent were both supposed to have been working for Co-conspirator 1, who was not indicted in the case.

The former ICE agent, Felix Cisneros, was convicted in April in federal court in Los Angeles of five counts, including helping an “alien” enter the country, falsifying records and lying to federal agents. His sentencing is scheduled for Oct. 1.

Prosecutors have suggested public corruption in the Utah case, too. In written arguments for keeping Jacob and Isaiah Kingston in jail pending trial, prosecutors argue the brothers must have been tipped off to a February 2016 federal raid of Washakie offices in South Salt Lake and Jacob Kingston’s home. Shelves were cleared and computer hard drives were wiped, the federal motion says.

Jacob and Isaiah Kingston as well as Termendzhyan are thus far being kept in jail, though all three still have opportunities to ask judges to release them before their trials.

During the past two weeks, The Salt Lake Tribune requested interviews with multiple people associated with Washakie and SBK in business and court filings. All declined to comment. One person cited the grand jury testimony that person already gave and what the person said was another grand jury that is scheduled.